Question

Suppose a recent college graduate's first job allows her to deposit $150 at the end of each month in a savings plan that earns 6%, compounded monthly. This savings plan continues for 15 years before new obligations make it impossible to continue. If the accrued amount remains in the plan for the next 15 years without deposits or withdrawals, how much money will be in the account 30 years after the plan began? (Round your answer to the nearest cent.)

Answer 1

Answer:

$107,054.45

Explanation:

rate 6% annual compounded monthly so the monthly rate will be 0.5%

The situation will be the following

first we have

Annuity of 150 for 15 years x 12 = 180 months and 6% /12 = 0.5% rate

Then

this ammount will be generate interest for 15 more years

Annuity of $150 during 180 period at 0.5% = $43,623

Then 43,623 for 180 period at 0.5%  = $107,054.45